Current Perspectives

Brexit: The Road to Exit

April 3, 2017

In 2016, British citizens voted in a historic referendum to exit the European Union (EU). On March 29, British Prime Minister Theresa May submitted a letter to the head of the European Council, officially triggering a two-year process of negotiations around the future of their trade relationship, the status of European residents who currently live in Britain (and vice versa), and the amount Britain will be required to pay to the EU in order to leave.

This article serves as a reference point and helps answer questions that may arise as the exit process grows more involved.

Highlights:

  • Britain will want to negotiate favourable trading terms, particularly as 45% of its exports go to the EU. Meanwhile, the EU is likely to bargain aggressively as the UK leaving the EU sets a very bad precedent for other countries that remain.
  • As Theresa May wrote in her letter, the UK is exiting the EU “but not Europe, and wants to remain committed partners and allies”.
  • The EU doesn’t want to punish Britain for this decision, but will want to draw a hard line that prevents the UK from receiving a better deal outside the EU than it received inside.
  • Much will depend on the years of negotiation that will now take place and the relationship that is subsequently established.
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Eric Lascelles
Chief Economist
RBC Global Asset Management Inc.

Krystyne Manzer, CFA
Portfolio Specialist
RBC Global Asset Management Inc.


A Sleepy Budget for Busy Times

March 22, 2017

No one thought that Canada’s 2017 budget would match the punch of the 2016 edition given that the latter was the product of a newly minted Liberal government looking to put its mark on fiscal policy after a decade in the wilderness. Still, the 2017 budget is surprising in how little it delivers.

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Eric Lascelles
Chief Economist
RBC Global Asset Management Inc.


Breaking Down Bonds in a Low Rate Environment

February 2017

Over the past few years, we’ve heard a lot in the financial press about the possibility of rising interest rates and the negative consequences this would have on bond portfolios. Given the extent of recent yield increases and resultant decline in bond values, investors understandably feel uneasy about the prospect of further yield increases in the months ahead. However, as we will illustrate, should yields continue to rise – which is far from a certainty – the implications for fixed-income investments are more favourable than they appear.

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U.S. Protectionism: Effects on Canada

January 30, 2017

Trump’s inaugural address and his actions during his first days in office reiterated his vision for more protectionist policies to help U.S. workers gain an advantage. Whether this is done through tariffs or renegotiating provisions surrounding existing trade deals like NAFTA, Trump has considerable leeway to act.

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Eric Lascelles
Chief Economist
RBC Global Asset Management Inc.


The Second Rate Hike is Here, Now What?

December 14, 2016

For those who have been watching monetary policy closely over the last several years, the U.S. Federal Reserve’s (Fed’s) decision to hike the federal funds rate by 0.25% on December 14, 2016 might feel like déjà vu. In a move that was widely predicted, this hike brings the fed funds rate into a range of 0.50%-0.75%.

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Eric Lascelles
Chief Economist
RBC Global Asset Management Inc.

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A Consequential Vote for Change

November 9, 2016

After a divisive and highly publicized election campaign, Donald Trump has been chosen to be the 45th President of the United States.

In this summary, RBC Global Asset Management’s Chief Economist Eric Lascelles, discusses what the outcome may mean for the U.S. economy, fiscal policy and financial markets.

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Eric Lascelles
Chief Economist
RBC Global Asset Management Inc.

Krystyne Manzer, CFA
Portfolio Specialist
RBC Global Asset Management Inc.

Resources

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